Sole Proprietorship

All companies must have registered in the G.E.MI. (General Commercial Register) housed in one of the Chambers (Professional, Commercial, Craft, or Economic), depending on the category of the activity they want to declare as a professional freelance candidate.

In the process of the registration in G.E.MI. you can declare and secure the distinctive title of the company. Search through G.E.MI. if there is the name you want to declare at www.businessregistry.gr.

G.E.MI. registration fees – Chamber: 60,00€.

The fixed expenses of a sole proprietorship at G.E.MI. are at 45,00€/year and for the Chamber at 22,00€/year.

 The registration in GEMI is done by remote communication via email or phone in the respective section of the Chamber of your city e.g., Professional, Commercial, Craft, Technical. After COVID-19 the registration in GEMI is done after the start of work in the Tax Office.

Afterward, you have to register in the insurance registers of EFKA (former OAEE) as a freelancer, in the branch owned by the company.

The pre-registration in EFKA is done only electronically through the EFKA inventory application here, stating the desired KAD.

If there is a problem, send an email to the EFKA service where the company belongs, or better yet submit a request via e-EFKA (We stay home). There is no registration fee in EFKA. There should be no debts to EFKA for the issuance of a certificate for the Tax Office.

In addition, the official registration in EFKA begins with the start at the tax office. Whether it starts, at the tax office, at the beginning of the month, or at the end, you are charged the contributions for the whole month.

Every year, every professional must declare the insurance class of EFKA, to which they want to belong. If they do not do it, they will automatically enter the lower insurance class.

The company must have at least one place to house its tax books safely and to be able to accept an inspection at any time as well.

In the service activities, you can have your home as a base. However, if you want to engage in trade and some other activities, unfortunately, you are not allowed to have the home for tax purposes unless you sell online (e-shop) with the approval of the head of the Tax Office.

If the space belongs to you, produce an E9. If the space does not belong to you, you can use the home of the host as headquarters, to be more precise, one room of the house. The above is confirmed by the owner with a sworn declaration. In all other cases, an electronic lease contract of a professional lease is required, with an electronic acceptance by the entrepreneur.

It is time to prepare the electronic file for the tax office. The whole process of starting a business is done only electronically!

 A more modern online method made its appearance in October 2021, through which all the supporting documents must be submitted through taxis in the category “My Requests”.

 The basic documents for starting a business

1. The certificate of registration – re-registration of EFKA (no longer required).
2. Proof of registered office: Ownership contract-E9 or lease agreement posted on taxis or a sworn declaration from a relative for the free concession of space and their E9.
3. The new entry form D211, completed with all the KAD and the basic information of the company, name, registered office, VAT status, and intra-community transactions.
4. Photocopy of police ID or passport.
5. A sworn declaration that the headquarters and the main activity (KAD) will be declared with an authentic signature through gov.gr or KEP [I will start a business at the address……………….with the main object of work …………………].

Additional supporting documents that may be needed:

1. A sworn declaration for acceptance of inclusion in the VAT exemption regime for income up to 10.000€ (if selected).
2. A degree operating license to practice the profession (if required).
3. A pre-approval of a sanitation inspection – Authorization to use the space by the Municipality (if required and mainly for specific professions such as canteen, bakery, restaurant, hairdresser, etc.).
4. A certificate of an inspection of the registered office (if you do not receive an exemption).
5. In the case of foreign natural persons, third-country nationals residing within the country, a residence permit or proof, that they have entered and are legal residents in the country, must be submitted.
6. Anything else that can be requested by the tax office.

*No capital or any fee is required when setting up the sole proprietorship.

KAD is the activity code number that must be declared by each professional or company. The code number should match the real object of the activity and the image of the company as much as possible. You must declare the main KAD and then as many secondary ones as you want, without there being any problem if one is completely different from the others. You have the right to engage in as many activities as you wish.

Great attention should be given here, as each code may require additional supporting documents such as an operating license from the Municipality or a license to practice, different accounting monitoring, or a specially designed space. Unfortunately, these codes have been in force since 2008 and have not been adapted to modern data. Few have been added since. If you do not find the exact name, you will choose a close one along with the simultaneous approval of the tax office.

Article 39 of the VAT code, provides considerable flexibility for small businesses declaring total gross annual income up to 10,000€, to be exempt from the VAT regime.

In case the total gross of income exceeds that of 10,000€, the company must go to the VAT regime. The change is made via a tax declaration in the tax register to which the company’s registered office belongs. This process should take place within 30 days from the beginning of the tax year, or as soon as it has exceeded the limit of 10,000€.

You look for the responsible auditor who undertakes an on-site inspection (autopsy) of the headquarters to confirm that the space where the company will be housed is the intended one for this activity. In service activities, with the company headquarters being a house or in some other special case, you can procure an exemption from inspection, but this is decided by the head of the tax office.

After the successful autopsy inspection, you can now make a declaration of commencement of work in the Register, together with the other supporting documents for starting a sole proprietorship.

 * The autopsy procedure occurs in very rare cases.

If you want to make transactions abroad and you want these invoices to be justified and deducted as an expense, you must join the system of intra-community acquisitions-deliveries by applying to the tax registry. This can be done at the same time as the start of work, but also later. The tax office has set some restrictions on this:

1. a) intra-community transactions with the company headquarters at home are not allowed
2. b) an on-site inspection (autopsy) of your business premises may be required

Those who carry out the intra-community transactions are required to submit a declaration of Summary Tables of intra-community transactions. The declaration is submitted on time, every month until the 26^th day of the following month which it concerns.

In the case of intra-community transactions, you should be aware that you may be required to submit an Intrastat declaration if the value of your transactions exceeds the amounts set each time by the Statistical Office, which are called statistical thresholds. The statistical thresholds that are in force from 1/1/2022 until 31/12/2022 are the following:

1. One hundred and fifty thousand euros (150.000 €) for the arrivals and
2. ninety thousand euros for (90.000 €) for the shipments.

The registry of the tax office will post the certificate of commencement of work in taxis, in the field of e-notifications. You can pick up the original commencement of work, by making an appointment at the tax office, if you ever need it. 

You mandatorily must keep accounting records, now almost exclusively electronically. The basic documents are:

1. Sales invoice (SI) or services rendered invoice (SEI)

It is the item issued for each sale of goods and provision of services to professionals and companies and is subject to VAT.

2. Receipt for retail sales (RRS) or services rendered receipt (SRR)

For each sale of goods or services to private consumers, instead of an invoice, you will need to issue a receipt for retail sales, retail trade receipt, or services rendered receipt.

 Attention: For financial transactions between individuals and companies with cash the limit is 500€. Plus, VAT is 24%. Higher amounts occur only through a Bank.

From 01/01/2022 with MyData, it is mandatory that all of the documents (Invoices and Receipts) be issued electronically. In the very near future, simple paper receipts not issued through a cash register or the application will be essentially invalid.

The Ministry of Economy knows that many problems have been reported in the system, both technical and social, however, we do not know how it will be implemented in practice! We are talking about two different things:

1. Issuance of documents electronically
2. Transmission of documents electronically (automatical update of the income book)

The solutions that exist, for the way and the process of transmitting the data for the companies, are the following:

1. through a provider of electronic invoicing services, that means through a company that will transmit the income documents on behalf of the liable company. Therefore, SRR and SEI are transmitted in real-time, simultaneously with their issuance.
2. through a commercial program (accounting, ERP, CRM, etc.) which is directly linked to AADE. These programs provide support with an annual contract and offer an extra level of organization in the business. Invoices to professionals should be sent directly to AADE at their actual time of issue, while receipts to individuals (SRR) have a deadline of 5 days to be posted on mydata.
3. through the application of AADE, the e-invoice. The application is free, it issues invoices and documents electronically and transmits them directly to Mydata. The link is https://www.aade.gr/timologio and there are many videos and instructions for use, as no support is provided.
4. electronically, through the special registration form in AADE. Only in this option essentially is handwritten invoicing allowed, regardless of whether the documents will be transmitted electronically. The deadline for transmission is the 20^th day of the following month in which they were issued. The conditions that apply to the persons liable are divisive:
   • to keep a simplified accounting system and their annual gross of income is up to 50,000€ or
   • to issue up to fifty (50) sales invoices per year (not S.R.R.) regardless of the accounting system.
5. through a cash register. This method of data transmission only applies to retail sales mandatory for retail KAD.

You will procure a stamp with all the details of your business from a printing house or bookstore. In case you have 2 or even more different activities or you add KAD later, you can make more stamps for all your activities. The basic pieces of information are below.

The obtainment of a stamp nowadays is optional.

From the date of commencement of activity in the tax office, you must obligatorily proceed to the creation of a professional cash account, within 30 days, in a bank of your choice, which will serve you, and then you will declare it to taxisnet.

The payment service provider must be active in Greece in order for iban to be accepted.

All the transactions made for the purpose of the business should be made from the merchant’s account. All the receipts should be credited there as well. Something like that can make the tax inspection process easier. Statement of Business account here.

According to the latest official J.M.D. 2019, there are some professions that are required to install a pos electronic trading terminal.

If you belong to this category, you need to find a way for your customers to pay you, if needed, by using a card.

You can buy or rent a POS terminal device, create an e-shop, and use intangible pos online such as the viva wallet. There is no deadline or registry somewhere, of the payment card system you choose, however, even in the case of a random inspection, there should be an active way of payment by card.

The choice of tax mechanism requires special attention because it will serve you for several years, it is declared in your Tax Identification Number and the loss of its cash register or the book can result in a large fine. In case the nature of the business requires the operation of a cash register, you must compulsorily buy a machine that is connected to the online GSIS and taxis.

The declaration of the Commencement of the Electronic Tax Mechanisms is made through the internet in taxisnet (www.gsis.gr) within 10 days from the date of purchase.

It is mandatory that all the activities, which have a KAD with retail trade, must have a cash register.

• Income-expense book: Monitoring in a simplified system and mandatory updates every three months (fine for non-updated books 3. 000€)

• VAT return: Submission every 3 months (The first VAT quarter January-February-March filing, is submitted until the end of April and so forth for the other three quarterly VAT returns)
• Tax return of the year: E1 and E3

• Withholding tax for entrepreneurs: Every month for every entrepreneur that a withholding tax invoice has been issued

• (EST) Employee Services Tax: Every month for each employee with a salary of nearly over 600€ or for some specific specialties.

For service-provision professions -mainly for consulting services- all the fees they receive with amounts of net value over 300€, should be subject to a withholding tax of 20% on the net value of the invoice. The withholding tax of 20% is carried out only in sole proprietorships- natural persons.

The withholding is done by the company that accepts the services. In the final payment, the customer withholds the 20% of our fee and is obliged to submit a statement to taxisnet by the end of the following month and pay the amount of tax with the debt ID that will be confirmed in the taxis system.

Obligation to carry out the withholding tax and the tax return of 20%: the customer

Obligation to issue an invoice correctly and to inform that a withholding tax must be carried out: the company (us)

The withholding tax shall be returned or netted off to the other professional upon the submission of the next annual E1 tax return and will appear in the pre-completed code.

The fees paid due to the provision of services, in which the element of advice or scientific, artistic and intellectual creation prevails, are included in consulting or similar services. That is to say, professions that by the provisions of Law No.2238/1994, are characterized as liberal professions. (Circular POL. 1120/25.4.2014)

Example of withholding calculation:

In order to see, which rate you will apply to your transactions, we quote you the VAT rates which are in force, and which can be changed by law based on the country’s budgetary needs.

a) The normal rate, which is set at 24% of the taxable value (it is valued from 1/6/2016)

b) The reduced rate, amounts to the 13% of the taxable value. Examples include:

• basic mass consumption products such as bread, milk, meat, fish, olive oil, cheese, pasta, meals, cereals, vegetables, coffee, tea, salt, vinegar, various food preparations based on cereal, the flour, starch, live animals, items for the service of people with disabilities, agricultural supplies, etc.,
• services such as accommodation in tourist accommodations, provision of home care services for children, the elderly, the sick, etc., the operation of restaurants, cafes, patisseries, and related businesses, etc…,

c) The discounted rate which is set at 6% of the taxable value. Examples include:

Medicine, books, newspapers, magazines, tickets for theatrical performances and concerts, electricity, natural gas, etc.

Taxation of sole proprietorship 2022 – Tax scale 2022

Reduced tax rate of 9% for income up to 10.000€

For the first three years of the pursuit of the business, the tax rate (9%) is reduced by 50%, therefore the tax is 4,5%, as long as the turnover does not exceed 10,000€.

 There is no tax-free in sole proprietorships. Taxation is done on net profits and starts from the first euro earned.

For a sole proprietorship that declares damages or zero profit, the professional is taxed with presumptions (for example, presumption of living unmarried 3.000€, car, house, loan, etc.). 

The tax advance rate is 55%. For the first three (3) years of operation, there is a 50% discount.

The tax advance is paid in the first year and then every year the tax of the next fiscal year is refunded and paid in advance. Therefore, after the first year, if the incomes remain stable, the change is not perceived.

a) The performance fee is set at 650€per year and is certified with the income tax declaration of natural persons.

b) If you maintain branches, it is set at 600€per year for each branch.

c) If you are subject to the “block” regime, the amount of the performance fee is set at 400€ if your company headquarters is in a tourist place or town-village with a population of up to 200,000 inhabitants, and 500€ per year if the headquarters is in a city with a population of over 200,000 inhabitants.

a) if you have not exceeded the first five years from the first day of business,

b) if you have a disability that amounts to or is greater than eighty percent (80%),

c) if you operate in villages with a population of up to 500 inhabitants and on islands with less than 3.100 inhabitants unless they are tourist sites, where this exemption does not apply.

Starting a sole proprietorship is done in a single way, and you have the same responsibilities as all businesses. However, only for the way of taxation, one can join the regime “service provision receipt” or freelancing.

Although, in some cases, even though you are in business, your income may be taxed as income from paid employment. This means that you will be tax-free for up to 8.500€, which applies to incomes from paid work. The freelancer essentially pays their own insurance contributions and issues an invoice each month to be paid. Conditions:

1. When you provide services to a company with a contract, and you trade with natural or legal persons that do not exceed the three (3) or the 75% percent of the gross of income from the business activity which comes from one (1) of the natural or legal persons that receive these services,
2. If you do not have the commercial status,
3. If you do not maintain a professional facility that is different from your home (company headquarters at home).

When the taxation is done under this scheme, no expenses are deducted for the company, except for the EFKA insurance contributions.

 You are not allowed to justify other expenses, even if they have been made for the purpose of doing business, due to the fact that it is not exactly considered a business. In addition, transactions with individuals (retail) are not allowed.

*The “service provision receipt” regime does not apply when the taxpayer receives income from paid work.

The classic way of taxation, INCOME – EXPENSES = NET PROFIT, belongs to the philosophy of the normal business that deals with everyone without exception and needs expenses for the reduction of tax.

The solidarity contribution is calculated on all incomes, that is to say, income from paid work, business and agricultural activity, interest, rents, compensations, and special amounts.

Taxable income is the income that remains after deducting expenses that are deducted from the total gross of the income. In order to determine the profit from the business activity, expenses eligible for discount are the ones which:

• are made in the interest of the company
• correspond to a real transaction
• are entered in the income-expense books and are proved with appropriate supporting documents.

Expenses that are not deductible from the gross of income from the business activity are, as an indication, the following:

• Any kind of expense related to the purchase of goods or services worth more than 500 euros, as long as the partial or full payment was not made using a bank payment instrument (remittance, check, etc.),
• The unpaid insurance contributions,
• Fines and penalties, including the surcharges,
• Personal consumption expenses

**(detailed non-deductible expenses are mentioned in article 23 of the I.T.C.)

If you intend to employ staff, you necessarily must make an employer inventory at EFKA on the same day of recruitment. EFKA electronic inventory here.  

Next, you must submit the recruitments electronically at the service ergani, within 3 days.

In addition, you must make a contract with a security technician who will supervise your business premises on a monthly basis. Alternatively, you can attend the seminar about security technicians at a ΚΕΚ, which allows you to receive a certification and have this capacity only for your own business.

• Signing an employment contract: The most important document is the contract/agreement that is signed by both parties and states the total salary or wage, as well as the parameters of the job (place, time, special issues, etc.)

• Declaration and payment of contributions according to the DPS: It is submitted every month for the declaration of contributions and stamps of the employees in IKA
• Staff list: Any person that is found in the workplace, who is under the control of HLI, and is not declared on the staff list. The known fine imposed is 10,500€

• Payment of salary through the bank: Notification of salary analysis to the employee and mandatory payment of salary through the Bank.

• Employer benefits:Granting of compulsory leave per month of employment (20 days for the first year) and payment of leave allowances, Christmas gifts, and Easter ones (14 salaries for one year in total)

• Statements to the Labor Inspectorate: Changes in the contract or schedule before the employee takes over work, annual submission of staff list, and leave schedule

• Annual cost of employment for 40 hours/week: Salary: 569,38€ X 14 = 971,32€, Contributions: 243,06€ X 14 = 3.402,84€, Total: 11.374,16€

Therefore, a full-time job employee costs the company a total of approximately 947,84€ per month.

The stores of sanitary interest necessarily must have a legal operating license, which is usually issued by a professional engineer in the Municipality. In addition, you should take care of the following:

1. Complaint form certified by the competent authority (Region)
2. Book of fire department certified by the fire department
3. Smoking book approved by the relevant municipality
4. Safety book for a technician together with the annual report
5. Labeling for the prohibition of alcohol consumption for persons under 18 years of age
6. Permission to play music
7. Permit of use for common areas
8. Work permits and health records for the employees considered by the police department
9. The EFET documents concerning the obligatory companies (refrigeration temperatures, cleaning activities, disinfestation slips, delivery of food)

1. Reduced taxation rate of 9% for incomes up to 10.000€
2. Exemption from performance fee 650€ for the first five years
3. Reduced contributions to EFKA at 136€ per month for the first five years
4. Possibility of VAT exemption with annual turnover up to 10.000,00€.
5. The tax advance rate was reduced from 95%, to 55%. For the first three (3) years of operation, there is a 50% discount
6. For the first three years of business, the taxation rate (9%) is reduced by 50%, that is to say, the taxation is 4.5%, provided that the annual gross of income does not exceed 10,000€.

You should pay great attention to the monitoring of the taxation and bureaucratic obligations and responsibilities that a company has.

A very small mistake, even out of ignorance, can certify fines from 100€ up to 10,000€ and impose severe sanctions mainly during a tax inspection.

Approaching a business requires responsibility, preparation, and constant updating. You need to find a reliable partner such as TKC Consulting & Finance who can take on the tax obligations as well as the new ones that are constantly being created.

A good accountant works for your benefit, in a human and secure cooperation, which is based on the trust and chemistry between you. Not everyone fits with everyone! It supports you throughout your whole business career, whether you are starting a sole proprietorship, or the establishing of a general partnership GP, or the establishment of a P.C., or whichever other form of company.

You can obtain accounting support only for the keeping and updating of your books or for the submission of applications. This particular option has a low cost for your business, due to the fact that the cooperation does not happen every month because it does not provide advice and communication, therefore it allows you to pay for each job separately.

 Only in the full monthly accounting support, there is the capability of direct communication and as a matter of priority, the consulting with the company, the immediate information for new laws, the support when it comes to tax inspections, and the guidance for maximizing profit. Although in order to receive the best possible accounting support with all the benefits, both sides, the accountant and entrepreneur, must be able to treat each other with respect and appreciation!